2016

One of Trump’s biggest plans to stimulate the economy won’t be great for most Americans
Markets Insider, December 21, 2016

Companies that benefitted the most immediately hired more workers. But the pace was inconsistent, Pavilion said, adding that some of these new workers may have been accountants and lawyers needed to implement the repatriation. To be fair, the number of employees they had right before the recession was higher compared to the trough when the AJCA was passed.


Uncertainty Can Push Term Premiums Higher
Barron’s, December 19, 2016

Investors may be asking themselves about the term premium. Pavilion argues that it can grow from here. While the term premium is up since the election, it’s still actually low in recent historical terms.


Why Lithium Prices May Fall As Auto Battery Demand Rises
Barron’s, December 2, 2016

Lithium prices could start to fall soon, and investors should differentiate between battery technology and the raw commodity.
So say the analysts at Strategy-Pavilion Global Markets, who point to the supply of lithium-ion batteries to be produced at Tesla’s Gigafactory in Nevada.


Even before Trump, US exporters complained that the dollar was too strong
CNBC, November 22, 2016

Research from Pavilion Global Markets from early in the third-quarter earnings season showed that the strong dollar was the top reason cited by companies for bad earnings — more than wages, oil prices, the election, Brexit, the Federal Reserve or China. That data came out four weeks before the election.


Why Gold Can Recover From Its Recent Fall
Barron’s, October 19, 2016

So what’s causing this anomaly? It may be a readjustment in market positioning, given  that long gold positions were recently at their most “extreme” in years, Pavilion writes. After the turmoil, positions are now much closer to average.


Everyone Is Blaming the Dollar for a Rough Earnings Season
Bloomberg, October 12, 2016

“If they go ahead and hike at this point, the dollar issue becomes a greater problem,” Alex Bellefleur, head of global macro research and strategy at Pavilion, said by phone. “It’s the issue that’s back at the forefront of this earnings season. I’m not sure the problem will go away soon. It seems companies were so used to having a weaker dollar in the previous cycle and at this point it just isn’t.”


When this happens, you’ll know the oil industry is in trouble again
Business Insider, September 17, 2016

“If you start seeing a slowdown in Indian demand — although it’s only 4.5% of global oil demand — it still just doesn’t bode well for overall demand, given the negative outlooks and the negative pictures that we’re seeing everywhere else,” said Aidan Garrib, global market strategist at Pavilion Financial Corp.


Safety trade leaves S&P 500 on knife’s edge as valuations soar
The Globe and mail, September 12, 2016

“High valuations in these sectors have been directly proportional to the compression of the term premium demanded in holding long-term bonds, so you could pay a high valuation for dividend yields, staples and utilities,” Alex Bellefleur, head of global macro research and strategy at Pavilion Global Markets in Montreal, said by phone. “What happened late last week was a scenario in which people rethink that.”


Looking for Dividends? Try Japan
Ein News Desk, August 15, 2016

Japan isn’t normally the place where one goes when on the hunt for yield. Yet recent trends in Japanese dividends have us thinking again. For the first time in a long time, the Japanese equity market has a “normal” dividend yield.


With China Quiet, Emerging Markets Diverge On Fundamentals
Barron’s, August 5, 2016

When China doesn’t sneeze, emerging markets don’t get a cold. In fact, what happens is that investors may focus more on country and currency fundamentals, say the folks at Strategy-Pavilion Global Markets. That is especially as China stays out of the headlines as its equity market struggles.


Are Frontier Investments Better Than Emerging Markets?
Barron’s, July 27, 2016

The riskiest developing markets are categorized as “frontier,” which has proved a better investment category than emerging markets in recent years.


Entering the Swamp: S&P 500 Hits New High as Dow Flirts With Its Own
Barron’s, July 12, 2016

Stocks are surging despite the fact that earnings will likely be weak–again. The folks at Pavilion Global Markets explain: Q2 corporate earnings will likely remain weak. Sales growth is tepid and operating margins are under pressure. This will permeate profits. However, don’t expect a surge in earnings misses…


Brexit Steamrolls Fed Model for Stock Bulls as Bond Yields Drop
Bloomberg, June 28, 2016

With Treasury yields approaching 1.40 percent Monday, rising rates seem like the least of anyone’s problems. Still, should yields start to rise with economic growth still sluggish, the Fed’s warning would be relevant to equity owners, according to Alex Bellefleur, head of global macro research and strategy at Pavilion Global Markets.


Buy Emerging Market Local Debt, Or Focus On Bad Loans?
Barron’s, June 23, 2016

“…there are reasons investors should be positive on emerging market debt: emerging markets have issued roughly $65 million in euro-denominated bonds so far this year, and Pavilion Global Markets writes that emerging market debt is “set for a record year.”


So Peaceful Until…: Dow Gains 2 Points, S&P 500 Ticks Up in Yawner of a Day
Barrons, June 1, 2016

Then again, something could make the sky cave in and the devil cut loose. The folks at Pavilion Global Markets worry about the debt levels of companies in the S&P 500:
In recent weeks, we have written at length about the deteriorating earnings results and prospects of U.S. corporations. However, another trend has taken place at the same time: a general increase in leverage among U.S. companies. Indeed, the percentage of S&P 500 companies with a lower debt-to-assets ratio than a year ago is now at its lowest point since the 1990s. This signals that the corporate deleveraging impulse that took place initially after the 2007-09 recession is over…


ETFs to Hedge Against a Poor Earnings Season
ETF Trends, April 7, 2016

While slightly less pessimistic, FactSet projects first quarter earnings to decline 8.5%, which is significantly lower compared to its previous estimated earnings growth rate of 0.8% for Q1 2016 at the start of the year. Alex Bellefleur, head of global macro strategy and research at Pavilion Global Markets, argues that the earnings results will be insufficient to justify current valuations, which suggests that the equities market could have a hard time ahead. Consequently, investors seeking to hedge against a potential pullback in an expected weak earnings season may turn to inverse or short ETFs.


U.S. Braces for Worst Earnings Season Since 2009 Crisis: Chart
Bloomberg, April 7, 2016

U.S. corporate profits are expected to drop the most in 6 1/2 years in the first quarter, led by a wipeout in the embattled energy sector. Earnings for companies in the Standard & Poor’s 500 Index will fall 9.8 percent year-over-year, which would be the sharpest decline since the third quarter of 2009 and a fourth consecutive quarter of contraction, according to Bloomberg data. Results will be insufficient to justify current stock valuations, says Alex Bellefleur, head of global macro strategy and research at Pavilion Global Markets.


Investors pile into Brazilian equities over bets on imminent regime change
Financial Post, March 18, 2016

“Investors are betting on regime change,” said Alex Bellefleur, head of global macro strategy at Montreal-based Pavilion Global Markets. “Dilma’s policies have been a complete disaster for Brazil, so investors are really looking for her to go away, and have a new government with better policies to curb inflation, make the structural reforms to get the budget deficit in line, get productivity back up, and to thrive in a world with lower commodity prices.” Rousseff has faced criticism as her policies to stem inflation and boost growth haven’t panned out. This contributed to a massive credit bubble in parts of the Brazilian economy, and everything unraveled when commodity prices started falling.


Canada misses out on new auto assembly plants
Globe and Mail, February 16, 2016

Automotive credit is tightening and is expected to hit sales in the United States analysts at Montreal-based Pavilion Global Markets Ltd. said on Monday, echoing comments made by U.S. analysts in recent weeks. “Mexico and Canada likely will also feel some consequences from a peak in the U.S. auto cycle,” Pavilion’s analysts said. “Both countries’ auto sectors depend on U.S. demand and are integrated closely with the U.S. industry. A peak would hurt both countries, but especially Canada, where there has been evidence of a loss of competitiveness in recent years.”


Will Cheap Oil Bust US Banks?
Barron’s, January 28, 2016

With the high-yield market signaling trouble ahead for many oil companies, the market has started to become worried that rising defaults in the oil patch will hit U.S. banks. The folks at Pavilion Global Markets think that’s unlikely:

Aside from HY debt holders, many see U.S. banks as another potential casualty of crashing oil prices. Some sources point to total exposure of U.S. banks to the oil and gas industry to 3-5% of their assets. Last November, a joint review by the Federal Reserve Board, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) assessed the risks coming from U.S. banks’ aggregate oil portfolio2, which totaled USD 276.5 billion (or 7.1 percent of the total USD 3.9 trillion syndicated loan portfolio of large U.S. banks in all industries).


India’s Consumer: An Emerging Market Bright Spot?
Barron’s, January 14, 2016

If you have to be invested emerging markets, a bet on the Indian consumer is a way to find value in an otherwise unattractive asset class, according to Pavilion Global Markets.

Though “things could get worse before they start getting better,” India’s economic growth of about 7.5% year over year is likely to be one of the brighter spots in the emerging market space this year, Pavilion says. That will be fueled by the country’s slow-moving reform agenda, which could triple spending on road improvements, which “should rapidly translate in GDP growth.”


Bets against Saudi Arabia’s currency peg may be premature
Morningstar, January 13, 2016

Many market strategists believe that, though the country has hemorrhaged money over the past year-and-a-half as falling oil prices left it with a massive budgetary shortfall, bets against the currency peg are premature. “We are not claiming the exchange rate peg is indestructible, just that authorities have a number of other, less drastic policy alternatives available to them before considering such a drastic change.” said strategists from Pavilion Global Markets.